2013 (7) TMI 1067 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the issue of rectification of mistake by the Assessing Officer u/s. 154/251/143(3) of the Income-tax Act, 1961 regarding the withdrawal of interest on unpaid interest already granted to the assessee.

Details of the Judgment:

1. The appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals) confirming the action of the Assessing Officer in rectifying the mistake by withdrawing interest on unpaid interest already granted. The assessment was framed by the DCIT u/s. 154/251/143(3) of the Act for the assessment year 2002-03.

2. The main grounds raised by the assessee were that there was no apparent mistake in the original order, and the Assessing Officer erred in rectifying it. The CIT(A) was also criticized for upholding the revised order. The appellant argued that interest on unpaid interest should have been granted u/s. 244A of the Act.

3. The facts revealed that the assessee filed its return for AY 2002-03, which was processed u/s. 143(1)(a) and later scrutinized. The CIT(A) computed a refund for the assessee, including interest u/s. 244A. However, the AO later withdrew the interest on unpaid interest through a rectification order.

4. The CIT(A) did not grant relief to the appellant on this issue, stating that the AO's calculation of interest u/s. 244A was correct. The appellant then appealed to the ITAT.

5. During the hearing, the appellant's counsel argued that the AO's decision was based on a previous Tribunal judgment and the principles laid down by the Supreme Court. The ITAT considered the relevant legal precedents and observed that the grant of interest on unpaid interest was permissible.

6. Referring to the Supreme Court's decision in the Sandvik Asia Ltd. case, the ITAT held that the appellant was entitled to interest on the amounts paid under sections 214 and 244. The ITAT also cited a decision of the Madhya Pradesh High Court supporting the grant of interest under sections 244 and 244A.

7. The ITAT concluded that the issue of interest on unpaid interest was debatable and that the Assessing Officer had no jurisdiction to rectify the order. Therefore, the ITAT allowed the appeal of the assessee.

8. In the final decision, the ITAT ruled in favor of the assessee, holding that the grant of interest on unpaid interest was justified based on legal precedents and dismissed the jurisdiction of the Assessing Officer to rectify the order.

This judgment highlights the importance of legal precedents and the correct application of tax laws in determining the entitlement to interest on unpaid interest under the Income-tax Act, 1961.